<PAGE>
(ICON)
Prudential
High Yield
Total Return
Fund, Inc.
SEMI
ANNUAL
REPORT
Sept. 30, 1999
(LOGO)
<PAGE>
A Message from the Fund's President November 15, 1999
- -------------------------------------------------------------------------------
(PHOTO)
Dear Shareholder,
Prudential High Yield Total Return Fund posted negative returns for its
six-month reporting period that ended on September 30, 1999, as did its
benchmark, the Lipper High Current Yield Fund Average. Investors pushed bond
yields higher (and their prices lower) because they expected the Federal
Reserve to increase short-term interest rates. The Fed raised rates twice in
the summer of 1999 to curb U.S. economic growth and to prevent a buildup in
inflation pressures. These changes in U.S. monetary policy, among other
factors, prompted the sell-off in high-yield (junk) bonds.
The following report takes a closer look at developments in the high-yield bond
market during the first half of our fiscal year, and explains how the Fund was
positioned accordingly.
One integrated and expanded team
I would like to take this opportunity to tell you about some changes we've made
to our Fixed Income Group. Earlier in the year, we combined our fixed-income
areas into one integrated group that will manage money for Prudential's
investors and policyholders. This group now manages approximately $135 billion
in assets, making it one of the three largest fixed-income money managers in
the country. Our expanded depth, breadth, and scale also allow us to tap the
best talent and share investment ideas, proprietary research, and analytical
tools.
To utilize these resources effectively, we recently organized the group into
teams, each specializing in a different sector of the fixed-income market. The
High Yield Sector team, headed by Casey Walsh, will now be responsible for the
day-to-day management of your Prudential High Yield Total Return Fund. Many of
the investment professionals who supported the management of the Fund in the
past, including George Edwards and Paul Price, will work together to share
their knowledge and strive to enhance performance.
Thank you for your continued confidence in Prudential mutual funds. I firmly
believe that the group's combined resources and our new team approach will
make us a powerhouse in the world of fixed-income investing across all
sectors.
Sincerely,
John R. Strangfeld
President
Prudential High Yield Total Return Fund, Inc.
<PAGE>
Performance Review
- -------------------------------------------------------------------------------
(PHOTO) (PHOTO) (PHOTO)
Casey Walsh, team leader of the High Yield Sector team, and George Edwards
and Paul Price, team members.
Investment Goals and Style
The Fund seeks total return through high current income and capital
appreciation. The Fund invests primarily in securities rated BB and below by
independent rating agencies, unrated bonds, defaulted bonds, and distressed
securities. All are below investment grade and are commonly known as junk
bonds. Such securities are subject to a greater risk of nonpayment of interest
than higher-rated bonds. The Fund also invests in equity-related securities,
convertible securities, and preferred stock. There can be no assurance that
the Fund will achieve its investment objective.
Inflation jitters battered bond markets
Bond markets around the world faced a challenging period during the six months
that ended on September 30, 1999. Brisk U.S. economic growth, a strengthening
global economy, and climbing oil prices threatened to boost inflation, which
hurts bonds by eroding the value of their fixed interest payments. To
compensate for this risk, investors drove most bond yields higher, which caused
their prices to slide.
But some junk bonds performed relatively well
Within the high-yield (junk) bond market, lower-quality bonds--such as those
rated single-B and CCC--initially weathered this sell-off better than debt
securities rated BB, which is the highest ratings category for junk bonds. This
difference in performance largely reflected the fact that lower-quality junk
bonds tend to be somewhat less affected by changes in the level of interest
rates than higher-quality junk bonds. The Fund derived benefit from this
development because the bulk of its holdings are in junk bonds rated single-B
and below.
Then Fed rate hikes roiled bond markets
However, the Fund generated negative returns for its six-month reporting period
because lower-quality junk bonds eventually succumbed to the bearish trend in
fixed-income markets. Even they could not withstand the intense sell-off that
ensued as the Federal Reserve boosted the Federal funds rate in June and August
of 1999 in order to slow U.S. economic growth and avoid mounting inflation.
This key rate--what U.S. banks charge each other for overnight loans--was
raised by a quarter of a percentage point each time, leaving it at 5.25% as of
August 24, 1999.
Junk bonds were also hurt by concern over the increasing number of companies
that failed to make timely interest payments on their high-yield bonds in 1999.
Furthermore, some brokerage firms have reduced the size of their junk-bond
inventories. This temporarily reduced liquidity in the high-yield market, which
caused prices of junk bonds to decline. These combined factors contributed to
the poor performance of the junk-bond market, in which the Lehman Brothers
U.S. Corporate High-Yield Index posted a negative 1.08% return for the
six-month reporting period.
<PAGE>
Market volatility created good trading opportunities
While such volatile market conditions presented many challenges, they also
created attractive opportunities to buy and sell high-yield bonds. For example,
we were able to book profits on bonds of energy companies that had rallied
earlier in the year as soaring oil prices improved the industry's earnings
outlook. Energy bonds declined from 7.4% of the Fund's total investments as of
March 31, 1999 to 4.5% by September 30, 1999.
By contrast, we increased holdings of bonds of cable television companies,
which rose from 8.0% of the Fund's total investments as of March 31, 1999 to
9.0% by the close of the six-month period. The cable television industry tends
to be less cyclical and has stable cash flows. We believe the outlook improved
for the cable television sector of the high-yield debt market after a series of
consolidations occurred in the industry in mid-summer of 1999.
We also purchased telecommunications bonds
Telecommunications bonds remained the Fund's largest sector holding. We
particularly favored the wireless sector, where there is a high likelihood of
consolidation. We also favored wireline companies that have larger
capitalizations. Overall, the telecommunications industry exhibits strong
revenue growth. We increased the Fund's exposure to telecommunications bonds
from 16.5% of its total investments as of March 31, 1999 to 18.9% by the end of
our six-month reporting period. Among our purchases were bonds of NEXTLINK
Communications and Level 3.
Performance at a Glance
Cumulative Total Returns1 As of 9/30/99
<TABLE>
<CAPTION>
Six One Since
Months Year Inception2
<S> <C> <C> <C>
Class A -0.86% 5.78% -3.80%
Class B -1.11 5.23 -4.52
Class C -1.11 5.23 -4.52
Class Z -0.74 6.02 -3.54
Lipper High Current Yield Fund Avg.3 -0.90 4.84 -3.38
</TABLE>
Average Annual Total Returns1 As of 9/30/99
<TABLE>
<CAPTION>
One Since
Year Inception2
<S> <C> <C>
Class A 1.55% -5.51%
Class B 0.23 -6.14
Class C 3.18 -4.66
Class Z 6.02 -2.53
</TABLE>
Past performance is not indicative of future results. Principal and investment
return will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
1 Source: Prudential Investments Fund Management LLC and Lipper, Inc. The
cumulative total returns do not take into account sales charges. The average
annual total returns do take into account sales charges. The Fund charges a
maximum front-end sales charge of 4% for Class A shares. Class B shares are
subject to a declining contingent deferred sales charge (CDSC) of 5%, 4%, 3%,
2%, 1%, and 1% for six years. Class B shares will automatically convert to
Class A shares, on a quarterly basis, approximately seven years after purchase.
Class C shares are subject to a front-end sales charge of 1% and a CDSC of 1%
for 18 months. Class C shares bought before November 2, 1998, have a 1% CDSC if
sold within one year. Class Z shares are not subject to a sales charge or
distribution and service (12b-1) fees.
2 Inception date: Class A, B, C, and Z, 5/5/98.
3 The Lipper Since Inception return is for all funds in each share class in the
High Current Yield Fund category. The Lipper average is unmanaged. High Current
Yield funds aim at high (relative) current yield from fixed income securities,
have no quality or maturity restrictions, and tend to invest in lower-grade
debt securities.
1
<PAGE>
Review Cont'd.
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Looking Ahead
High-yield bonds may be poised to rally
Despite the difficult market conditions of recent months, we believe any
material improvement in investor sentiment could result in a solid rebound in
the prices of junk bonds, given the attractive level of their yields. Indeed,
there are signs that this may already be happening. AMG Data Services recently
reported that net cash flows in high-yield bond mutual funds turned positive in
the first week of November 1999. A major influx of money may flow into
high-yield bonds in the first quarter of next year, which is when many
institutional investors have historically allocated new money to the junk-bond
market. If this pickup in demand occurs and the supply of newly issued junk
bonds remains low, this could bode well for the high-yield market.
Additional Performance Tracking Tools
You can access comprehensive information about the performance of your
Prudential mutual funds 24 hours a day through our Web site and automated phone
service. At www.prudential.com/investing, you'll find the daily closing values,
changes from the previous day, and quarterly performance for all of our retail
mutual funds. Other available resources include daily, monthly, and quarterly
market commentary.
Prudential is committed to meeting shareholders' needs. That is why we continue
to upgrade and make improvements to our Web site. Please send us your comments
about how we can continue to improve our site to meet your needs.
Daily fund values are also a toll-free call away from any touch-tone phone.
Call (800) 225-1852 and follow the voice prompts to obtain mutual fund closing
values and yields. You can even set up a personalized "watch list" to track
specific Prudential mutual funds.
Mutual Fund Automated Service: (800) 225-1852
Main Menu Submenus
1. Account information 1. Account balance
2. Transactions
3. Order forms
2. Prices and yields
3. Transactions
4. Order checks and statements
5. PIN change
Five Largest Holdings
Expressed as a percentage of net assets as of 9/30/99
Phar-Mor Inc. 1.29%
Diamond Cable Co. 1.28
New Millennium Homes 1.26
Allied Waste NA, Inc. 1.24
Aircraft Funding 1.23
Credit Quality
Expressed as a percentage of total investments as of 9/30/99
BBB 0.5%
BB 6.5
B 53.9
CCC 14.3
CC 1.0
C 0.1
Not Rated 14.7
Equity 7.6
Short-term/Cash 1.4
2
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--96.7%
CORPORATE BONDS--87.5%
- ------------------------------------------------------------------------------------------------------------------------------
Aerospace--0.7%
BE Aerospace, Inc., Sr. Sub. Notes B1 9.50% 11/01/08 $ 250 $ 244,375
Stellex Inds., Inc., Sr. Sub. Notes Caa1 9.50 11/01/07 1,000 760,000
------------
1,004,375
- ------------------------------------------------------------------------------------------------------------------------------
Automotive--1.7%
Collins & Aikman Products Co., Sr. Sub. Notes B2 11.50 4/15/06 100 95,500
Eagle-Picher Industries, Inc., Sr. Sub. Notes B3 9.375 3/01/08 400 360,000
Hayes Wheels Int'l., Inc., Sr. Sub. Notes B2 9.125 7/15/07 500 467,500
JPS Automotive Products Corp., Sr. Notes B1 11.125 6/15/01 650 651,625
Paragon Corp. Holdings, Inc., Sr. Notes B3 9.625 4/01/08 1,000 340,000
Venture Holdings, Sr. Notes B2 9.50 7/01/05 460 427,800
------------
2,342,425
- ------------------------------------------------------------------------------------------------------------------------------
Broadcasting & Other Media--5.2%
Ackerley Group, Inc., Sr. Sub. Notes B2 9.00 1/15/09 1,000 960,000
American Lawyer Media Holdings, Inc., Sr. Disc. Notes,
Zero Coupon (until 12/15/02) B3 12.25 12/15/08 1,500 945,000
Capstar Broadcasting, Sr. Disc. Notes, Zero Coupon
(until 2/1/02) B3 12.75 2/01/09 2,000 1,680,000
CD Radio, Inc., Sr. Disc. Notes, Zero Coupon (until
12/1/02) Caa1 15.00 12/01/07 1,000 477,500
Coaxial Communications, Inc., Sr. Notes B3 10.00 8/15/06 250 246,250
Grupo Televisa S.A., Sr. Disc. Notes, Zero Coupon
(until 5/15/01) (Mexico) Ba2 13.25 5/15/08 475(f) 394,250
Imax Corp., Sr. Notes Ba2 7.875 12/01/05 100 93,000
Jacor Communications Co., Sr. Sub. Notes B2 8.75 6/15/07 1,000 1,050,000
Lin Holdings Corp., Sr. Disc. Notes, Zero Coupon (until
3/1/03) B3 10.00 3/01/08 500 327,500
Radio Unica Corp., Sr. Disc. Notes, Zero Coupon (until
8/1/02) Caa1 11.75 8/01/06 500 303,750
SFX Entertainment, Inc., Sr. Sub. Notes B3 9.125 2/01/08 750 697,500
Spectrasite Hldgs., Inc., Sr. Disc. Notes NR Zero 4/15/09 350 175,000
------------
7,349,750
- ------------------------------------------------------------------------------------------------------------------------------
Building & Related Industries--1.8%
New Millenium Homes, Sr. Notes NR 12.00 9/03/04 2,000 1,760,000
Presley Cos., Sr. Notes Caa3 12.50 7/01/01 800 712,000
------------
2,472,000
</TABLE>
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See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Cable--5.5%
Adelphia Communications Corp.,
Sr. Notes B1 10.50% 7/15/04 $ 500 $ 516,250
Sr. Notes, PIK B1 9.50 2/15/04 43 42,939
Avalon Cable Holdings LLC, Sr. Disc. Notes, Zero Coupon
(until 12/1/02) Caa1 11.875 12/01/08 1,000 625,000
Cablevision S.A., (Argentina) Ba3 13.75 5/01/09 500(f) 460,000
Classic Cable, Inc., Sr. Sub. Notes B3 9.375 8/01/09 200 194,500
Classic Communications, Inc., Sr. Disc. Notes, Zero
Coupon
(until 8/1/03) Caa1 13.25 8/01/09 1,000 667,500
Diamond Cable Co., Sr. Disc. Notes, Zero Coupon (until
12/15/00) (United Kingdom) B3 11.75 12/15/05 2,000(f) 1,795,000
Falcon Holdings Group, L.P., Sr. Disc. Notes, Zero
Coupon
(until 4/15/03) B2 9.285 4/15/10 1,000 710,000
International Cabletel, Inc., Sr. Disc. Notes, Zero
Coupon
(until 4/15/00) B3 12.75 4/15/05 500 483,750
Mediacom LLC, Sr. Notes B2 7.875 2/15/11 250 217,500
Multicanal S.A. (Argentina) Ba3 13.125 4/15/09 500(f) 462,500
Telewest Communications PLC,
Sr. Disc. Deb., Zero Coupon (until 10/1/00) (United
Kingdom) B1 11.00 10/01/07 100(f) 89,000
Sr. Disc. Notes, Zero coupon (until 4/15/04) (United
Kingdom) B1 9.25 4/15/09 350(f) 210,875
TVN Entertainment Corp., Sr. Notes NR 14.00 8/01/08 1,000(d) 350,000
United Int'l. Holdings, Inc., Sr. Disc. Notes, Zero
Coupon
(until 2/15/03) B3 10.75 2/15/08 1,500 918,750
------------
7,743,564
- ------------------------------------------------------------------------------------------------------------------------------
Capital Goods--0.4%
Thermadyne Holdings Corp.,
Sr. Disc. Notes, Zero Coupon (until 6/1/03) Caa1 12.50 6/01/08 500 220,000
Sr. Sub. Notes B3 9.875 6/01/08 500 405,000
------------
625,000
- ------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.5%
Lyondell Chemical Co., Sr. Sub. Notes B2 10.875 5/01/09 1,250 1,256,250
Sterling Chemical, Inc., Sr. Sub. Notes Caa3 11.75 8/15/06 500 300,000
ZSC Specialty Chemical Ltd., Sr. Notes B2 11.00 7/01/09 595 595,000
------------
2,151,250
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Products--1.4%
Corning Consumer Product Co., Sr. Sub. Notes B3 9.625% 5/01/08 $ 1,080 $ 853,200
Packaged Ice, Inc., Sr. Notes B3 9.75 2/01/05 750 671,250
Revlon Consumer Products Corp., Sr. Notes B2 9.00 11/01/06 500 453,750
------------
1,978,200
- ------------------------------------------------------------------------------------------------------------------------------
Containers--1.3%
Graham Packaging Holdings Co., Sr. Disc. Notes, Zero
Coupon (until 1/15/03) Caa1 10.75 1/15/09 2,000 1,280,000
Radnor Hldgs. Corp., Gtd. Sr. Notes B2 10.00 12/01/03 300 303,000
Riverwood Int'l. Corp.,
Sr. Notes B3 10.625 8/01/07 85 84,362
Sr. Sub. Notes Caa1 10.875 4/01/08 85 80,113
------------
1,747,475
- ------------------------------------------------------------------------------------------------------------------------------
Drugs & Health Care--4.1%
Columbia HCA Healthcare Corp., Deb. Ba2 7.50 11/15/95 105 77,469
Concentra Operating Corp., Sr. Sub. Notes B3 13.00 8/15/09 245 245,000
Harborside Healthcare Corp., Sr. Sub. Disc. Notes, Zero
Coupon (until 8/1/03) B3 11.00 8/01/08 750 247,500
Lifepoint Hospitals Hldgs., Inc., Sr. Sub. Notes B3 10.75 5/15/09 130 129,675
Magellan Health Services, Inc., Sr. Sub. Notes Caa1 9.00 2/15/08 1,500 1,282,500
Mariner Post-Acute Network, Inc., Sr. Sub. Disc. Notes,
Zero Coupon (until 11/1/02) C 10.50 11/01/07 1,840(e) 92,000
Mediq, Inc., Sr. Sub. Notes B3 11.00 6/01/08 600 420,000
Team Health, Inc., Sr. Sub. Notes B3 12.00 3/15/09 750 753,750
Triad Hospitals Hldgs., Inc., Sr. Sub. Notes B3 11.00 5/15/09 970 965,150
US Healthworks, Inc., Sr. Disc. Notes NR Zero 10/15/04 1,500 1,575,000
------------
5,788,044
- ------------------------------------------------------------------------------------------------------------------------------
Energy--4.7%
AEI Resources, Inc., Sr. Sub. Notes Caa1 11.50 12/15/06 500 440,000
Anker Coal Group, Inc., Sr. Notes Ca 9.75 10/01/07 1,000 440,000
Applied Power, Inc., Sr. Sub. Notes B1 8.75 4/01/09 250 234,375
Calpine Corp., Sr. Notes Ba2 7.75 4/15/09 500 466,250
Comstock Resources, Inc., Sr. Notes B2 11.25 5/01/07 500 515,000
DI Industries, Inc., Sr. Notes B1 8.875 7/01/07 425 379,312
Eott Energy Partners L.P., Sr. Notes Ba2 11.00 10/01/09 140 142,100
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Energy (cont'd.)
Gothic Production Corp., Sr. Sec'd Notes B3 11.125% 5/01/05 $ 550 $ 473,000
Gulf Canada Resources Ltd., Sr. Sub. Deb. (Canada) Ba2 9.625 7/01/05 625(f) 643,750
Leviathan Finance Corp., Sr. Sub. Notes B2 10.375 6/01/09 350 358,750
P & L Coal Holdings Corp., Sr. Sub. Notes B2 9.625 5/15/08 750 720,000
RBF Finance Co. Ba3 11.00 3/15/06 170 178,500
R & B Falcon Corp., Sr. Notes Ba3 12.25 3/15/06 1,250 1,318,750
Swift Energy Co., Sr. Sub. Notes B2 10.25 8/01/09 300 300,000
------------
6,609,787
- ------------------------------------------------------------------------------------------------------------------------------
Financial Services--1.3%
Amresco, Inc., Sr. Sub. Notes (cost $736,546; purchased
11/20/98) Caa3 9.875 3/15/05 1,000(b) 680,000
Delta Financial Corp., Sr. Notes B3 9.50 8/01/04 300 240,000
Lodgian Financing Corp., Gtd. Sr. Sub. B3 12.25 7/15/09 500 485,000
Metris Cos., Inc., Sr. Notes Ba3 10.125 7/15/06 500 455,000
------------
1,860,000
- ------------------------------------------------------------------------------------------------------------------------------
Food & Beverage--5.3%
Advantica Restaurant Group, Inc., Sr. Notes B2 11.25 1/15/08 1,500 1,305,000
Ameriking, Inc., Sr. Notes B3 10.75 12/01/06 215 191,350
Ameriserve Food Distribution, Inc., Sr. Notes B2 8.875 10/15/06 750 585,000
Carrols Corp., Sr. Sub. Notes B2 9.50 12/01/08 525 446,250
CKE Restaurants, Inc., Gtd. Notes B1 9.125 5/01/09 1,000 770,000
Fresh Foods, Inc., Sr. Sub. Notes B3 10.75 6/01/06 500 462,500
Grupo Azucarero Mexico S.A., Sr. Notes (Mexico) Caa3 11.50 1/15/05 1,250(f) 525,000
Iowa Select Farms L.P., Sr. Sub. Notes Caa1 10.75 12/01/05 1,125 877,500
Nebco Evans Holding Co., Sr. Disc. Notes, Zero Coupon
(until 7/15/02) Caa2 12.375 7/15/07 500 200,000
Purina Mills, Inc., Sr. Sub. Notes (cost $1,477,500;
purchased 7/9/99) Caa1 9.00 3/15/10 2,000(b) 540,000
Sbarro, Inc., Sr. Notes Ba3 11.00 9/15/09 405 400,444
SFC New Holdings, Inc., Sr. Sub. Notes NR 13.25 8/15/03 1,500 1,140,000
SFC Sub., Inc., Deb. NR 11.00 12/15/09 269 27
Vlasic Foods Int'l., Inc., Sr. Sub. Notes B2 10.25 7/01/09 35 31,675
------------
7,474,746
- ------------------------------------------------------------------------------------------------------------------------------
Gaming--2.5%
Alliance Gaming Corp., Sr. Sub. Notes B3 10.00 8/01/07 665 495,425
Aztar Corp., Sr. Sub. Notes B2 13.75 10/01/04 30 32,063
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Gaming (cont'd.)
Fitzgeralds Gaming Corp., Sr. Notes Caa3 12.25% 12/15/04 $ 625(e) $ 343,750
Isle Capri Black Hawk LLC, First Mtge. Notes B3 13.00 8/31/04 1,000 1,085,000
Mohegan Tribal Gaming Auth., Sen. Sub. Nt. Ba3 8.75 1/01/09 140 137,200
Santa Fe Hotel, Inc., First Mtge. Notes Caa2 11.00 12/15/00 1,000 970,000
Trump Atlantic City Assoc., First Mtge. Notes B2 11.25 5/01/06 500 425,000
------------
3,488,438
- ------------------------------------------------------------------------------------------------------------------------------
Industrials--3.3%
AMM Holdings, Inc., Sr. Disc. Notes, Zero Coupon (until
7/1/03) Caa1 13.50 7/01/09 2,000 400,000
Continental Global Group, Inc., Sr. Notes B3 11.00 4/01/07 1,500 885,000
Gentek, Inc., Sr. Sub. Notes B2 11.00 8/01/09 300 306,750
Great Lakes Carbon Corp.,
Sr. Disc. Deb., Zero Coupon (until 5/15/03) Caa1 13.125 5/15/09 1,000 520,000
Sr. Sub. Notes, PIK B3 10.25 5/15/08 1,000 937,500
Huntsman ICI Chemicals, Inc., Sr. Sub. Notes B2 10.125 7/01/09 650 635,375
ICF Kaiser Int'l., Inc., Sr. Sub. Notes Caa2 13.00 12/31/03 1,770 885,000
------------
4,569,625
- ------------------------------------------------------------------------------------------------------------------------------
Leisure & Tourism--2.5%
AMC Entertainment, Inc., Sr. Sub. Notes B3 9.50 2/01/11 300 246,000
Bally Total Fitness Hldg. Corp., Sr. Sub. Notes B3 9.875 10/15/07 1,000 942,500
Louisiana Quinta Inns, Inc., Sr. Notes Ba2 7.25 3/15/04 150 130,749
Premier Cruise Ltd., Sr. Notes (cost $973,646;
purchased 5/19/98) Caa2 11.00 3/15/08 1,000(b)(e) 0
Premier Parks, Inc., Sr. Notes B3 9.75 6/15/07 550 522,500
Production Resource LLC, Sr. Sub. Notes Caa1 11.50 1/15/08 1,000 930,000
Town Sports Int'l., Inc., Sr. Notes B2 9.75 10/15/04 775 720,750
------------
3,492,499
- ------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Services--3.1%
Coinstar, Inc., Sr. Disc. Notes, Zero Coupon (until
10/1/99) NR 13.00 10/01/06 1,550 1,588,750
Desa Int'l., Inc., Sr. Sub. Notes Caa1 9.875 12/15/07 1,000 673,750
ICON Health & Fitness, Inc., Gtd. Notes NR 12.00 9/27/05 666(e) 366,300
InterAct Systems, Inc., Sr. Disc. Notes (cost $690,000;
purchased 5/11/98) NR Zero 8/01/03 1,500(b) 555,000
Kindercare Learning Center, Inc., Sr. Sub. Notes B3 9.50 2/15/09 750 703,125
La Petite Academy, Inc., Sr. Notes B3 10.00 5/15/08 500 420,000
------------
4,306,925
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Paper & Forest Products--3.9%
Ainsworth Lumber Ltd., Sr. Notes, PIK B2 12.50% 7/15/07 $ 1,000 $ 1,102,500
Doman Industries Ltd., Sr. Notes (Canada) Caa1 8.75 3/15/04 110(f) 77,825
Gaylord Container Corp., Sr. Notes Caa1 9.75 6/15/07 1,500 1,402,500
Maxxam Group Holdings, Inc., Sr. Notes B3 12.00 8/01/03 500 512,500
Millar Western Production Ltd., Sr. Notes B3 9.875 5/15/08 500 481,250
Repap New Brunswick, Inc., Sr. Sec'd. Notes Caa1 10.625 4/15/05 900 785,250
Stone Container Corp.,
Sr. Notes B2 12.58 8/01/16 250 274,375
Sr. Sub. Deb. B3 12.25 4/01/02 750 753,750
------------
5,389,950
- ------------------------------------------------------------------------------------------------------------------------------
Publishing--1.2%
Phoenix Color Corp., Sr. Sub. Notes B3 10.375 2/01/09 1,000 930,000
World Color Press, Inc.,
Sr. Sub. Notes Baa3 8.375 11/15/08 250 245,000
Sr. Sub. Notes Baa3 7.75 2/15/09 500 472,500
------------
1,647,500
- ------------------------------------------------------------------------------------------------------------------------------
Retail--2.9%
Big 5 Holdings Corp., Sr. Disc. Notes, Zero Coupon
(until 11/30/02) NR 13.45 11/30/08 1,000 500,000
Montgomery Ward Trade Claim (cost $695,187; purchased
8/19/98) NR Zero 12/31/00 2,144(b) 150,084
Musicland Group, Inc., Sr. Sub. Notes B3 9.00 6/15/03 1,500 1,380,000
Phar-Mor, Inc., Sr. Notes B3 11.72 9/11/02 1,805 1,805,000
Specialty Retailers, Inc., Sr. Notes B1 8.50 7/15/05 375 288,750
------------
4,123,834
- ------------------------------------------------------------------------------------------------------------------------------
Steel & Metals--3.0%
Algoma Steel, Inc., First Mtge. Notes B1 12.375 7/15/05 75 60,375
Doe Run Res. Corp., Sr. Notes B3 11.25 3/15/05 450 414,000
Kaiser Aluminum & Chemical Corp., Sr. Sub. Notes B3 12.75 2/01/03 1,000 1,010,000
National Steel Corp., First Mtge. Notes Ba3 9.875 3/01/09 250 246,250
Republic Technologies Int'l. Capital Corp., Sr. Notes B3 13.75 7/15/09 65(d) 61,750
Sheffield Steel Corp., First Mtge. Notes (cost
$286,000; purchased 7/1/99) Caa2 11.50 12/01/05 325(b) 269,750
UCAR Global Enterprises, Inc., Sr. Sub. Notes B2 12.00 1/15/05 1,000 1,052,500
WHX Corp., Sr. Notes B3 10.50 4/15/05 1,150 1,081,000
------------
4,195,625
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Supermarkets--2.1%
Homeland Stores, Inc., Sr. Notes NR 10.00% 8/01/03 $ 350 $ 294,000
Pantry, Inc., Sr. Sub. Notes B3 10.25 10/15/07 1,500 1,481,250
Pathmark Stores, Inc., Sr. Sub. Notes Caa1 9.625 5/01/03 250 246,875
Stater Brothers Holdings, Inc., Sr. Notes B2 10.75 8/15/06 895 912,900
------------
2,935,025
- ------------------------------------------------------------------------------------------------------------------------------
Technology--2.5%
Ampex Corp., Sr. Notes B(a) 12.00 3/15/03 1,000 1,020,000
Anacomp, Inc., Sr. Sub. Notes B3 10.875 4/01/04 155 151,900
DecisionOne Holdings Corp., Sr. Disc. Deb., Zero Coupon
(until 8/1/02) C 11.50 8/01/08 1,100(d)(e) 687
Intersil Corp., Sr. Sub. Notes B3 13.25 8/15/09 225(d) 231,750
PSINET, Inc., Sr. Notes B3 11.00 8/01/09 950 931,000
SCG Holding & Semiconductor Co., Sr. Sub. Notes B2 12.00 8/01/09 275 281,875
Verio, Inc., Sr. Notes B3 11.25 12/01/08 35 35,700
Viasystems, Inc., Sr. Sub. Notes B3 9.75 6/01/07 1,000 862,500
------------
3,515,412
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications--18.8%
Allegiance Telecom, Inc.,
Sr. Disc. Notes, Zero Coupon (until 2/15/03) NR 11.75 2/15/08 330 212,850
Sr. Notes NR 12.875 5/15/08 500 542,500
AMSC Acquisition Co., Inc., Sr. Notes NR 12.25 4/01/08 750 562,500
Arch Communications Group, Inc., Sr. Notes B3 13.75 4/15/08 500 360,000
Bestel S.A. De CV, Sr. Disc. Notes, Zero Coupon (until
5/15/01) (Mexico) NR 12.75 5/15/05 1,500(f) 945,000
Birch Telecom, Inc., Sr. Notes NR 14.00 6/15/08 1,000 990,000
Caprock Communications Corp., Sr. Notes B3 12.00 7/15/08 500 490,000
Cencall Communications Corp., Sr. Disc. Notes, Zero
Coupon (until 1/15/99) B2 10.125 1/15/04 250 250,625
Centennial Cellular Operating Co., Sr. Sub. Notes Caa1 10.75 12/15/08 250 260,000
Firstworld Communications, Inc., Sr. Disc. Notes, Zero
Coupon (until 4/15/03) NR 13.00 4/15/08 1,000 580,000
Focal Communications Corp., Sr. Disc. Notes, Zero
Coupon
(until 2/15/03) NR 12.125 2/15/08 300 168,750
Global Crossings Hldg. Ltd., Sr. Notes B1 9.625 5/15/08 250 256,875
GST USA, Inc., Sr. Disc. Notes, Zero Coupon (until
12/15/00) NR 13.875 12/15/00 500 380,000
Hyperion Telecommunications, Inc., Sr. Disc. Notes,
Zero Coupon (until 4/15/01) B3 13.00 4/15/03 370 310,800
ICG Holdings, Inc., Sr. Disc. Notes, Zero Coupon (until
9/15/00) B3 13.50 9/15/05 415 361,050
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications (cont'd.)
Impsat Corp., Sr. Notes B2 12.375% 6/15/08 $ 1,000 $ 780,000
Jordan Telecommunication Products, Sr. Sub. Notes B3 9.875 8/01/07 500 475,000
Level 3 Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 12/1/03) B3 10.50 12/01/08 505 282,800
Sr. Notes B3 9.125 5/01/08 190 171,950
McLeodusa, Inc., Sr. Notes B1 8.125 2/15/09 500 465,000
Microcell Telecommunications, Inc., Sr. Disc. Notes,
Zero Coupon (until 6/1/04) B3 12.00 6/01/09 1,250 756,250
Netia Holdings BV, Gtd. Sr. Notes (Poland) B3 10.25 11/01/07 500(f) 440,000
Nextel Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 2/15/99) B2 9.75 8/15/04 350 352,625
Sr. Disc. Notes, Zero Coupon (until 9/15/02) B2 10.65 9/15/07 155 114,312
Sr. Disc. Notes, Zero Coupon (until 2/15/03) B2 9.95 2/15/08 600 418,500
Nextel International, Inc., Sr. Disc. Notes, Zero
Coupon
(until 4/15/03) Caa1 12.125 4/15/08 500 250,000
Nextel Partners, Inc., Sr. Disc. Notes, Zero Coupon
(until 2/1/04) B3 14.00 2/01/09 1,100 640,750
Nextlink Communications, Inc., Sr. Notes B3 10.75 6/01/09 515 517,575
Northeast Optic Network, Inc., Sr. Notes NR 12.75 8/15/08 500 510,000
NTL Communications Corp., Sr. Disc. Notes, Zero Coupon
(until 10/1/03) B3 12.375 10/01/08 2,500 1,687,500
Omnipoint Corp., Sr. Notes B3 11.625 8/15/06 1,500 1,545,000
RSL Communications Ltd.,
Sr. Notes B2 12.25 11/15/06 250 248,750
Sr. Notes B2 12.00 11/01/08 100 98,500
Splitrock Services, Inc., Sr. Notes NR 11.75 7/15/08 750 671,250
Time Warner Telecom LLC, Sr. Notes B2 9.75 7/15/08 650 654,875
Tritel PCS, Inc., Sr. Sub. Disc. Notes, Zero Coupon
(5/15/04) B3 12.75 5/15/09 1,000 562,500
U.S. Xchange LLC, Sr. Notes NR 15.00 7/01/08 750 742,500
United Pan-Europe Communications N.V.,
Sr. Disc. Notes, Zero Coupon (until 8/01/04) B2 12.50 8/01/09 2,050(f) 1,148,000
Sr. Notes B2 10.875 8/01/09 1,060(f) 1,066,625
USA Mobil Communications, Inc., Sr. Notes B3 9.50 2/01/04 500 432,500
Versatel Telecom BV,
Sr. Notes (Netherlands) NR 13.25 5/15/08 1,000(f) 985,000
Sr. Notes (Netherlands) NR 11.875 7/15/09 500(f) 462,500
Viatel, Inc., Sr. Notes B3 11.25 4/15/08 1,000 965,000
Williams Communications Group, Inc. Sr. Notes B2 10.875 10/01/09 785 779,105
Winstar Communications, Inc., Sr. Disc. Notes, Zero
Coupon
(until 10/15/00) Caa1 14.00 10/15/05 500 417,500
Worldwide Fiber, Inc., Sr. Notes B3 12.50 12/15/05 1,000 1,015,000
------------
26,327,817
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Textiles--0.8%
Cluett American Corp., Sr. Sub. Notes B3 10.125% 5/15/08 $ 750 $ 495,000
Steel Heddle Mfg. Co., Sr. Sub. Notes Caa1 10.625 6/01/08 1,000 580,000
------------
1,075,000
- ------------------------------------------------------------------------------------------------------------------------------
Transportation/Trucking/Shipping--2.2%
Aircraft Funding, PIK NR 12.00 7/15/00 2,000 1,720,000
American Commercial Lines LLC, Sr. Notes B1 10.25 6/30/08 1,000 977,500
Stena AB, Sr. Notes (Sweden) B2 10.625 6/01/08 265(f) 185,500
Trism, Inc., Sr. Sub. Notes Caa3 10.75 12/15/00 1,000(e) 240,000
------------
3,123,000
- ------------------------------------------------------------------------------------------------------------------------------
Utilities--1.3%
AES Corp., Sr. Notes Ba1 9.50 6/01/09 750 750,000
York Power Funding, Sr. Sec'd. Notes (Cayman Islands) Ba3 12.00 10/30/07 1,000(f) 1,000,000
------------
1,750,000
- ------------------------------------------------------------------------------------------------------------------------------
Waste Management--2.5%
Allied Waste North America, Inc.,
Sr. Notes Ba3 7.625 1/01/06 500 445,000
Sr. Sub. Notes B2 10.00 8/01/09 1,900 1,738,500
Waste Systems Int'l., Inc., Sub. Notes NR 7.00 5/13/05 1,594 1,371,038
------------
3,554,538
------------
Total corporate bonds (cost $139,865,207) 122,641,804
------------
- ------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS--1.3%
Einstein / Noah Bagel Corp., Sub. Deb. NR 7.25 6/01/04 1,500 750,000
Key Energy Group, Inc., Sr. Sub. Notes NR 5.00 9/15/04 1,500 1,065,000
------------
Total convertible bonds
(cost $2,041,477) 1,815,000
------------
- ------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT BOND--0.3%
Republic of Brazil
(cost $495,651) B2 11.625 4/15/04 500(f) 466,250
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 1)
<S> <C> <C>
- -----------------------------------------------------------
COMMON STOCKS--2.1%
Beverly Enterprises, Inc.(c) 40,000 $ 170,000
Canadian Airlines Corp.(c) 4,400 4,792
Chesapeake Energy Corp. 12,000 46,500
CKE Restaurants, Inc. 25,000 181,250
Classic Communications, Inc.(c) 3,000 50,010
Grand Union Co.(c) 100,772 1,376,168
Intermedia Communications, Inc.(c) 1,563 33,995
Nevada Gold & Casinos, Inc.(c) 8,000 16,500
Omnipoint Corp.(c) 2,600 145,275
Premier Cruises, Ltd.(c) 74,059 249,949
RSL Communications, Ltd.(c) 5,000 91,250
Star Gas Partners L.P. 441 7,133
Viatel, Inc.(c) 4,037 119,344
Waste Systems Int'l., Inc. 87,150 501,112
------------
Total common stocks
(cost $2,482,498) 2,993,278
------------
- -----------------------------------------------------------
PREFERRED STOCKS--5.2%
Adelphia Communications Corp., 8,750
$13.00 980,000
AmeriKing, Inc., $13.00 1,074 17,184
Century Maintenance Supply, Inc., 11,340
$13.25 1,054,620
Cluett American Corp., $12.50 8,459 422,925
Concentric Network Corp., $13.50 1 339
Dobson Communications Corp., 774
$13.00 746,750
Geneva Steel Co., $14.00 1,000 250
Global Crossing Holdings, Ltd., 3,750
$10.50 395,625
Harborside Healthcare Corp., 570
$13.50 228,025
Intermedia Communications, Inc., 20,000
$7.00 370,000
IXC Communications, Inc., $12.50 25 26,084
Packaging of Corp. America, $12.37 57,500 817,500
Paxson Communications Corp., 1,199
$12.50 1,282,821
R & B Falcon Corp., $13.875 571 542,437
Rural Cellular Corp., $11.375 6 6,320
Supermarkets General Holdings
Corp., $3.52 10,000 348,125
------------
Total preferred stocks
(cost $7,848,866) 7,239,005
------------
WARRANTS(c)--0.3%
American Banknote Corp., expiring
12/1/02 @ $5.50 750 $ 8
American Mobile Satellite Corp.,
expiring 4/1/08 @ $12.51 750 30,000
Bestel S.A. De CV, expiring 1,500
5/15/05 4,500
Birch Telecom, Inc., expiring 1,000
6/15/08 5,500
DecisionOne Holdings Corp.,
expiring 8/1/07 @ $23.00 1,100 (d) 0
Firstworld Communications, Inc.,
expiring 4/15/08 1,000 70,000
HF Holdings, Inc., expiring 6,375
7/15/02 6,375
Interact Systems, Inc., expiring 1,500
8/1/03 15
Intersil Corp., expiring 8/15/09 225 (d) 0
R & B Falcon Corp., expiring
5/1/09
@ $9.50 550 137,500
Republic Technologies Int'l.
Capital Corp., expiring 7/15/04 65 (d) 0
Splitrock Services, Inc., expiring
7/15/08 750 54,000
TVN Entertainment Corp., expiring
8/1/08 1,000 (d) 0
Versatel Telecom BV, expiring 1,000
5/15/08 125,000
------------
Total warrants
(cost $8,765) 432,898
------------
Total long-term investments
(cost $152,742,464) 135,588,235
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12
<PAGE>
Portfolio of Investments as of September 30, 1999 PRUDENTIAL HIGH YIELD
(Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Interest Maturity Amount Value
Description Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT--3.4%
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE BOND
Bombardier Capital, Inc.
(cost $4,740,000) 5.80% 10/01/99 $ 4,740 $ 4,740,000
------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investments--100.1%
(cost $157,482,464; Note 4) 140,328,235
Other liabilities in excess of assets--(0.1)% (205,557)
------------
Net Assets--100% $140,122,678
------------
------------
</TABLE>
- ---------------
(a) Standard & Poor's Rating.
(b) Indicates a restricted security; the aggregate cost of such securities is
$4,858,879. The aggregate value $2,194,834 is approximately 1.6% of net
assets.
(c) Non-income producing securities.
(d) Consists of more than one class of securities traded together as a unit;
generally bonds with attached stock or warrants.
(e) Represents issuer in default on interest payments; non-income producing
security.
(f) US$ denominated foreign bonds.
NR--Not rated by Moody's or Standard & Poor's.
PIK--Payment in kind securities.
L.P.--Limited Partnership.
LLC--Limited Liability Company.
The Fund's current Prospectus contains a description of Moody's and Standard &
Poor's ratings.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13
<PAGE>
PRUDENTIAL HIGH YIELD
Statement of Assets and Liabilities (Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets September 30, 1999
<S> <C>
Investments, at value (cost $157,482,464).............................................................. $140,328,235
Dividends and interest receivable...................................................................... 3,336,451
Receivable for investments sold........................................................................ 720,404
Deferred expenses and other assets..................................................................... 130,659
Receivable for Fund shares sold........................................................................ 53,298
------------------
Total assets........................................................................................ 144,569,047
------------------
Liabilities
Payable for investments purchased...................................................................... 1,840,339
Payable for Fund shares reacquired..................................................................... 1,028,244
Bank overdraft......................................................................................... 923,049
Dividends payable...................................................................................... 356,241
Accrued expenses....................................................................................... 164,085
Due to Distributor..................................................................................... 74,898
Due to Manager......................................................................................... 59,513
------------------
Total liabilities................................................................................... 4,446,369
------------------
Net Assets............................................................................................. $140,122,678
------------------
------------------
Net assets were comprised of:
Common stock, at par................................................................................ $ 1,668
Paid-in capital in excess of par.................................................................... 165,316,189
------------------
165,317,857
Accumulated net realized loss on investments........................................................ (8,040,950)
Net unrealized depreciation on investments.......................................................... (17,154,229)
------------------
Net assets, September 30, 1999......................................................................... $140,122,678
------------------
------------------
Class A:
Net asset value and redemption price per share $8.40
($30,348,690 3 3,613,574 shares of common stock issued and outstanding)..........................
Maximum sales charge (4% of offering price)......................................................... .35
Maximum offering price to public.................................................................... $8.75
Class B:
Net asset value, offering price and redemption price per share $8.40
($91,730,492 3 10,920,658 shares of common stock issued and outstanding).........................
Class C:
Net asset value and redemption price per share $8.40
($16,234,038 3 1,932,902 shares of common stock issued and outstanding)..........................
Sales charge (1% of offering price)................................................................. .08
Offering price to public............................................................................ $8.48
Class Z:
Net asset value, offering price and redemption price per share $8.40
($1,809,458 3 215,375 shares of common stock issued and outstanding).............................
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 14
<PAGE>
PRUDENTIAL HIGH YIELD
TOTAL RETURN FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
September 30,
Net Investment Income 1999
<S> <C>
Income
Interest..................................... 8,335,421
Dividends.................................... 204,960
-------------
8,540,381
-------------
Expenses
Management fee............................... 492,860
Distribution fee--Class A.................... 43,610
Distribution fee--Class B.................... 364,116
Distribution fee--Class C.................... 66,317
Custodian's fees and expenses................ 92,000
Reports to shareholders...................... 75,000
Transfer agent's fees and expenses........... 65,000
Registration fees............................ 36,000
Amortization of deferred organization
expenses.................................. 18,000
Audit fees................................... 15,000
Legal fees and expenses...................... 11,000
Directors' fees.............................. 7,000
Insurance expenses........................... 1,000
Miscellaneous................................ 2,533
-------------
Total operating expenses.................. 1,289,436
Less: Management fee waiver (Note 2)......... (152,878)
-------------
Total expenses............................ 1,136,558
-------------
Net investment income........................... 7,403,823
-------------
Realized and Unrealized
Loss on Investments
Net realized loss on investment transactions.... (4,092,324)
Net change in unrealized depreciation of
investments.................................. (4,503,382)
-------------
Net loss on investments......................... (8,595,706)
-------------
Net Decrease in Net Assets
Resulting from Operations....................... $ (1,191,883)
-------------
-------------
</TABLE>
PRUDENTIAL HIGH YIELD
TOTAL RETURN FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months May 5, 1998(a)
Ended Through
Increase (Decrease) in September 30, March 31,
Net Assets 1999 1999
<S> <C> <C>
Operations
Net investment income........ $ 7,403,823 $ 12,113,394
Net realized loss on
investment transactions... (4,092,324) (3,948,626)
Net change in unrealized
depreciation of
investments............... (4,503,382) (12,650,847)
------------- --------------
Net decrease in net assets
resulting from
operations................ (1,191,883) (4,486,079)
------------- --------------
Dividends and distributions (Note 1)
Dividends from net investment
income
Class A................... (1,767,051) (3,017,075)
Class B................... (4,682,246) (7,451,879)
Class C................... (851,674) (1,460,665)
Class Z................... (102,852) (183,775)
------------- --------------
(7,403,823) (12,113,394)
------------- --------------
Distributions in excess of
net investment income
Class A................... -- (50,574)
Class B................... -- (132,431)
Class C................... -- (25,580)
Class Z................... -- (3,622)
------------- --------------
-- (212,207)
------------- --------------
Fund share transactions (Net of
share conversions) (Note 5)
Net proceeds from shares
sold...................... 15,172,480 200,008,881
Net asset value of shares
issued in reinvestment of
dividends and
distributions............. 4,509,018 7,763,506
Cost of shares reacquired.... (27,336,728) (34,687,093)
------------- --------------
Net increase (decrease) in
net assets from Fund share
transactions.............. (7,655,230) 173,085,294
------------- --------------
Total increase (decrease)....... (16,250,936) 156,273,614
Net Assets
Beginning of period............. 156,373,614 100,000
------------- --------------
End of period................... $140,122,678 $156,373,614
------------- --------------
------------- --------------
- ---------------
(a) Commencement of investment operations.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 15
<PAGE>
PRUDENTIAL HIGH YIELD
Notes to Financial Statements (Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
Prudential High Yield Total Return Fund, Inc. (the 'Fund') is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund was incorporated in Maryland on February 18, 1997.
The Fund issued 2,500 shares each of Class A, Class B, Class C and Class Z
common stock for $100,000 on February 18, 1998 to Prudential Investments Fund
Management LLC ('PIFM'). The Fund commenced investment operations on May 5,
1998. The primary investment objective of the Fund is total return through high
current income and capital appreciation. It seeks to achieve this objective by
investing in high yield fixed income securities, equity securities that were
attached to or included in a unit with fixed income securities at the time of
purchase, convertible securities and preferred stocks.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Security Valuation: Portfolio securities that are actively traded in the
over-the-counter market, including listed securities for which the primary
market is believed to be over-the-counter, are valued at prices provided by
principal market makers and pricing agents. Any security for which the primary
market is on an exchange is valued at the last sales price on such exchange on
the day of valuation or, if there was no sale on such day, the last bid price
quoted on such day. Securities issued in private placements are valued at the
bid price or the mean between the bid and asked prices, if available, provided
by principal market makers. Any security for which a reliable market quotation
is unavailable is valued at fair value as determined in good faith by or under
the direction of the Fund's Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost, which approximates market value.
Repurchase Agreements: In connection with transactions in repurchase agreements,
it is the Fund's policy that its custodian or designated subcustodians, under
triparty repurchase agreements as the case may be, take possession of the
underlying collateral securities, the value of which exceeds the principal
amount of the repurchase transaction, including accrued interest and, to the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
All securities are valued as of 4:15 p.m., New York time.
The Fund may hold up to 15% of its net assets in illiquid securities, including
those which are restricted as to disposition under securities law ('restricted
securities'). Certain issues of restricted securities held by the Fund at
September 30, 1999 include registration rights under which the Fund may demand
registration by the issuer, of which the Fund may bear the cost of such
registration. Restricted securities, sometimes referred to as private
placements, are valued pursuant to the valuation procedures noted above.
Securities Transactions and Net Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of portfolio
securities are calculated on an identified cost basis. Interest income is
recorded on an accrual basis and dividend income is recorded on the ex-dividend
date. The Fund accretes discount and amortizes premium as adjustments to
interest income. Income from payment-in-kind bonds is recorded daily based on an
effective interest method. Expenses are recorded on the accrual basis which may
require the use of certain estimates by management.
Net investment income (other than distribution fees) and unrealized and realized
gains or losses are allocated daily to each class of shares of the Fund based
upon the relative proportion of net assets of each class at the beginning of the
day.
Dividends and Distributions: The Fund declares daily and pays dividends of net
investment income monthly and makes distributions at least annually of any net
capital gains. Dividends and distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
Taxes: It is the intent of the Fund to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no federal
income tax provision is required.
Offering and Organization Expenses: Approximately $283,300 were incurred in
connection with the organization of the Fund. Offering cost of approximately
$110,400 and organization cost of approximately $172,900 are being amortized
ratably over a period of twelve months and sixty months, respectively, from the
date the Fund commenced investment operations.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with PIFM. Pursuant to this agreement PIFM
has responsibility for all investment advisory services
- --------------------------------------------------------------------------------
16
<PAGE>
PRUDENTIAL HIGH YIELD
Notes to Financial Statements (Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
and supervises the subadviser's performance of such services. PIFM has entered
into a subadvisory agreement with The Prudential Investment Corporation ('PIC');
PIC furnishes investment advisory services in connection with the management of
the Fund. PIFM pays for the cost of the subadviser's services, the compensation
of officers of the Fund, occupancy and certain clerical and bookkeeping costs of
the Fund. The Fund bears all other costs and expenses.
The management fee paid to PIFM is computed daily and payable monthly, at an
annual rate of .65% of the Fund's average daily net assets. PIFM has agreed to
waive a portion of its management fee. The waiver was .30 of 1% of the Fund's
average daily net assets for the period April 1, 1999 through May 31, 1999.
Effective June 1, 1999, such waiver is .15 of 1% of the Fund's average daily net
assets. The waiver amounted to $152,878 ($0.09 per share; .20 of 1% of the
Fund's average daily net assets). The Fund is not required to reimburse PIFM for
such waiver.
The Fund has a distribution agreement with Prudential Investment Management
Services LLC ('PIMS'), which acts as the distributor of the Class A, Class B,
Class C and Class Z shares of the Fund. The Fund compensates PIMS for
distributing and servicing the Fund's Class A, Class B and Class C shares
pursuant to plans of distribution (the 'Class A, B and C Plans'), regardless of
expenses actually incurred by them. The distribution fees are accrued daily and
payable monthly. No distribution or service fees are paid to PIMS as distributor
of the Class Z shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS with respect
to Class A, B and C shares, for distribution-related activities at an annual
rate of up to .30 of 1%, 1% and 1% of the average daily net assets of the Class
A, B and C shares, respectively. Such expenses under the Plans were .25 of 1%,
.75 of 1% and .75 of 1% of the average daily net assets of the Class A, B and C
shares, respectively, for the six months ended September 30, 1999.
PIMS has advised the Fund that it received approximately $30,000 and $19,900 in
front-end sales charges resulting from sales of Class A and Class C shares,
respectively, during the six months ended September 30, 1999. From these fees,
PIMS paid such sales charges to affiliated broker-dealers, which in turn paid
commissions to salespersons and incurred other distribution costs.
PIMS has advised the Fund that for the six months ended September 30, 1999, it
received approximately $189,000 and $6,900 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PIFM, PIC and PIMS are indirect, wholly owned subsidiaries of The Prudential
Insurance Company of America.
As of March 11, 1999, the Fund, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. Interest on any borrowings will be at market rates. The Funds pay a
commitment fee at an annual rate of .065 of 1% on the unused portion of the
credit facility, which is accrued and paid quarterly on a pro rata basis by the
Funds. The SCA expires on March 9, 2000. The Fund did not borrow any amounts
pursuant to either agreement during the six months ended September 30, 1999. The
purpose of the agreements is to serve as an alternative source of funding for
capital share redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC, a wholly owned subsidiary of PIFM, serves
as the Fund's transfer agent and during the six months ended September 30, 1999,
the Fund incurred fees of approximately $61,000 for the services of PMFS. As of
September 30, 1999, $9,800 of such fees were due to PMFS. Transfer agent fees
and expenses in the Statement of Operations include certain out-of-pocket
expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended September 30, 1999 were $67,038,962 and $73,489,444,
respectively.
The federal income tax basis of the Fund's investments as of September 30, 1999
was $157,619,868; accordingly, net unrealized depreciation for federal income
tax purposes was $17,291,633 (gross unrealized appreciation--$2,705,871; gross
unrealized depreciation--$19,997,504).
For federal income tax purposes, the Fund had a capital loss carryforward as of
March 31, 1999, of approximately $1,698,000 which expires in 2007. In addition,
the Fund has elected to treat net capital losses of approximately $2,225,000
incurred in the five month period ended March 31, 1999 as having occurred in the
current fiscal year.
- --------------------------------------------------------------------------------
17
<PAGE>
PRUDENTIAL HIGH YIELD
Notes to Financial Statements (Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
Note 5. Capital
The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are
sold with a front-end sales charge of up to 4%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Class C shares are sold with a front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. Class B shares will automatically convert to Class A shares on a
quarterly basis approximately seven years after purchase. A special exchange
privilege is also available for shareholders who qualify to purchase Class A
shares at net asset value. Class Z shares are not subject to any sales or
redemption charge and are offered exclusively for sale to a limited group of
investors.
The Fund has 2.5 billion shares of $0.0001 par value common stock authorized; 1
billion shares for Class A and 500 million shares each for Class B, Class C and
Class Z.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ------------------------------ ------------ ---------------
<S> <C> <C>
Six months ended September 30, 1999:
Shares sold................... 394,160 $ 3,474,197
Shares issued in reinvestment
of dividends................ 137,794 1,212,996
Shares reacquired............. (1,142,728) (10,054,542)
------------ ---------------
Net decrease in shares
outstanding before
conversion.................. (610,774) (5,367,349)
Shares issued upon conversion
from Class B................ 7,650 61,231
------------ ---------------
Net decrease in shares
outstanding................. (603,124) $ (5,306,118)
------------ ---------------
------------ ---------------
May 5, 1998(a) through
March 31, 1999:
Shares sold................... 5,287,840 $ 51,217,401
Shares issued in reinvestment
of dividends and
distributions............... 223,342 2,028,273
Shares reacquired............. (1,316,676) (11,925,521)
------------ ---------------
Net increase in shares
outstanding before
conversions................. 4,194,506 41,320,153
Shares issued upon conversion
from Class B................ 19,692 174,213
------------ ---------------
Net increase in shares
outstanding................. 4,214,198 $ 41,494,366
------------ ---------------
------------ ---------------
<CAPTION>
Class B
- ------------------------------
Six months ended September 30, 1999:
Shares sold................... 998,873 $ 8,792,432
Shares issued in reinvestment
of dividends................ 307,742 2,708,100
Shares reacquired............. (1,318,446) (11,544,986)
------------ ---------------
<CAPTION>
Class B Shares Amount
- ------------------------------ ------------ ---------------
<S> <C> <C>
Net decrease in shares
outstanding before
conversion.................. (11,831) $ (44,454)
Shares reacquired upon
conversion into Class A..... (7,664) (61,231)
------------ ---------------
Net decrease in shares
outstanding................. (19,495) $ (105,685)
------------ ---------------
------------ ---------------
May 5, 1998(a) through
March 31, 1999:
Shares sold................... 12,231,118 $ 119,622,135
Shares issued in reinvestment
of dividends and
distributions............... 514,809 4,669,308
Shares reacquired............. (1,788,582) (16,165,146)
------------ ---------------
Net increase in shares
outstanding before
conversion.................. 10,957,345 108,126,297
Shares reacquired upon
conversion into Class A..... (19,692) (174,213)
------------ ---------------
Net increase in shares
outstanding................. 10,937,653 $ 107,952,084
------------ ---------------
------------ ---------------
<CAPTION>
Class C
- ------------------------------
Six months ended September 30, 1999:
Shares sold................... 258,973 $ 2,294,689
Shares issued in reinvestment
of dividends................ 56,698 499,273
Shares reacquired............. (543,715) (4,845,487)
------------ ---------------
Net decrease in shares
outstanding................. (228,044) $ (2,051,525)
------------ ---------------
------------ ---------------
May 5, 1998(a) through
March 31, 1999:
Shares sold................... 2,556,202 $ 24,882,076
Shares issued in reinvestment
of dividends and
distributions............... 98,953 898,112
Shares reacquired............. (496,709) (4,436,511)
------------ ---------------
Net increase in shares
outstanding................. 2,158,446 $ 21,343,677
------------ ---------------
------------ ---------------
<CAPTION>
Class Z
- ------------------------------
Six months ended September 30, 1999:
Shares sold................... 68,868 $ 611,162
Shares issued in reinvestment
of dividends................ 10,071 88,649
Shares reacquired............. (100,833) (891,713)
------------ ---------------
Net decrease in shares
outstanding................. (21,894) $ (191,902)
------------ ---------------
------------ ---------------
May 5, 1998(a) through
March 31, 1999:
Shares sold................... 452,123 $ 4,287,269
Shares issued in reinvestment
of dividends and
distributions............... 18,552 167,813
Shares reacquired............. (235,906) (2,159,915)
------------ ---------------
Net increase in shares
outstanding................. 234,769 $ 2,295,167
------------ ---------------
------------ ---------------
</TABLE>
- ---------------
(a) Commencement of investment operations.
- --------------------------------------------------------------------------------
18
<PAGE>
PRUDENTIAL HIGH YIELD
Financial Highlights (Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B
-------------------------------- -------------
Six Months May 5, 1998(a) Six Months
Ended Through Ended
September 30, March 31, September 30,
1999 1999 1999
------------- -------------- -------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......................... $ 8.91 $ 10.00 $ 8.91
------ ------ ------
Income from investment operations
Net investment income(d)..................................... 0.45 0.79 0.42
Net realized and unrealized loss on investments.............. (0.51) (1.08) (0.51)
------ ------ ------
Total from investment operations.......................... (0.06) (0.29) (0.09)
------ ------ ------
Less distributions
Dividends from net investment income......................... (0.45) (0.79) (0.42)
Distributions in excess of net investment income............. -- (0.01) --
------ ------ ------
Total distributions.................................... (0.45) (0.80) (0.42)
------ ------ ------
Net asset value, end of period............................... $ 8.40 $ 8.91 $ 8.40
------ ------ ------
------ ------ ------
TOTAL RETURN(b).............................................. (.86)% (2.97)% (1.11)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).............................. $30,349 $ 37,558 $91,730
Average net assets (000)..................................... $34,888 $ 35,147 $97,098
Ratios to average net assets(c)(d):
Expenses, including distribution fees..................... 1.12% 1.06% 1.62%
Expenses, excluding distribution fees..................... 0.87% 0.89% 0.87%
Net investment income..................................... 10.13% 9.52% 9.64%
For Classes A, B, C and Z shares:
Portfolio turnover rate................................... 46% 97%
<CAPTION>
May 5, 1998(a)
Through
March 31,
1999
--------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......................... $ 10.00
------
Income from investment operations
Net investment income(d)..................................... 0.74
Net realized and unrealized loss on investments.............. (1.08)
------
Total from investment operations.......................... (0.34)
------
Less distributions
Dividends from net investment income......................... (0.74)
Distributions in excess of net investment income............. (0.01)
------
Total distributions.................................... (0.75)
------
Net asset value, end of period............................... $ 8.91
------
------
TOTAL RETURN(b).............................................. (3.45)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).............................. $ 97,454
Average net assets (000)..................................... $ 92,201
Ratios to average net assets(c)(d):
Expenses, including distribution fees..................... 1.64%
Expenses, excluding distribution fees..................... 0.89%
Net investment income..................................... 8.97%
For Classes A, B, C and Z shares:
Portfolio turnover rate...................................
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(c) Annualized.
(d) Net of management fee waiver.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 19
<PAGE>
PRUDENTIAL HIGH YIELD
Financial Highlights (Unaudited) TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Class Z
-------------------------------- -------------
Six Months May 5, 1998(a) Six Months
Ended Through Ended
September 30, March 31, September 30,
1999 1999 1999
------------- -------------- -------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......................... $ 8.91 $ 10.00 $ 8.91
------ ------ -----
Income from investment operations
Net investment income(d)..................................... 0.42 0.74 0.46
Net realized and unrealized loss on investments.............. (0.51) (1.08) (0.51)
------ ------ -----
Total from investment operations.......................... (0.09) (0.34) (0.05)
------ ------ -----
Less distributions
Dividends from net investment income......................... (0.42) (0.74) (0.46)
Distributions in excess of net investment income............. -- (0.01) --
------ ------ -----
Total distributions.................................... (0.42) (0.75) (0.46)
------ ------ -----
Net asset value, end of period............................... $ 8.40 $ 8.91 $ 8.40
------ ------ -----
------ ------ -----
TOTAL RETURN(b).............................................. (1.11)% (3.45)% (.74)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).............................. $16,234 $ 19,249 $ 1,809
Average net assets (000)..................................... $17,685 $ 18,089 $ 1,979
Ratios to average net assets(c)(d):
Expenses, including distribution fees..................... 1.62% 1.64% 0.87%
Expenses, excluding distribution fees..................... 0.87% 0.89% 0.87%
Net investment income..................................... 9.63% 8.96% 10.39%
<CAPTION>
May 5, 1998(a)
Through
March 31,
1999
--------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......................... $10.00
-----
Income from investment operations
Net investment income(d)..................................... 0.80
Net realized and unrealized loss on investments.............. (1.08)
-----
Total from investment operations.......................... (0.28)
-----
Less distributions
Dividends from net investment income......................... (0.80)
Distributions in excess of net investment income............. (0.01)
-----
Total distributions.................................... (0.81)
-----
Net asset value, end of period............................... $ 8.91
-----
-----
TOTAL RETURN(b).............................................. (2.82)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).............................. $2,113
Average net assets (000)..................................... $2,060
Ratios to average net assets(c)(d):
Expenses, including distribution fees..................... 0.89%
Expenses, excluding distribution fees..................... 0.89%
Net investment income..................................... 9.90%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(c) Annualized.
(d) Net of management fee waiver.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 20
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Eugene C. Dorsey
Delayne Dedrick Gold
Robert F. Gunia
Thomas T. Mooney
Stephen P. Munn
Thomas H. O'Brien
David R. Odenath, Jr.
John R. Strangfeld
Nancy H. Teeters
Louis A. Weil, III
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Deborah A. Docs, Secretary
Stephen M. Ungerman, Assistant Treasurer
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Swidler Berlin Shereff Friedman, LLP
405 Lexington Avenue
New York, NY 10174
Prudential Investments is a unit of The Prudential Insurance Company of
America, 751 Broad Street, Newark, NJ 07102.
The views expressed in this report and information about the Fund's portfolio
holdings are for the period covered by this report and are subject to change
thereafter.
The accompanying financial statements as of September 30, 1999, were not
audited and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
Class NASDAQ Cusip
A PYRAX 74437D109
B PYRBX 74437D208
C -- 74437D307
Z -- 74437D406 MF181E2
